What to expect from the speech of the head of the Bank of Canada Poloz

The Canadian dollar strengthens its position against the US dollar, despite the almost zero dynamics of oil prices and the strengthening of the US currency against most of the major currencies of the market. This growth can be attributed to the progress of negotiations between the US and Canada over NAFTA. In the event that new fair trade relations between the United States and Canada are reached, the planned duties on the part of the United States on steel and aluminum will not be extended to Canadian imports.

Also, this canadian strengthening can be linked with the correction before the speech of the head of the Bank of Canada Poloz. Yesterday, based on the results of the Bank of Canada meeting, the discount rate was maintained at 1.25%. This decision was based on a slowdown in the growth of oil prices, inflation, and the uncertainty of further trade relations with the United States. If in today’s speech of Poloz, market participants will receive signals about the continuation of tightening of monetary policy, it is necessary to expect a significant strengthening of the Canadian currency across the entire spectrum of the market.

Technical analysis: The pair USD/CAD continues to move between the 0.0 and 23.6 Fibonacci levels on H1, confirming my yesterday’s forecast. For more details see “The Bank of Canada left the discount rate unchanged“. In the course of the US trading, the price approached a significant support at 1.2870, in case of its further decline and consolidation below this level, one should expect the price to fall to the levels of 1.2820, 1.2790.

Fig. USD/CAD. The current price is $ 1.2909.

Alexander Sivtsov